For the month of Feb '17, FIIs and DIIs were both net buyers of equity, as per provisional figures. FII net buying crossed Rs 87 Billion; DII net buying was worth Rs 9.3 Billion.
(Those figures were skewed by a single day's buying and selling on Feb 17 '17, when a removal of cap on FII buying in HDFC Bank led to FII net buying of Rs 80 Billion and DII net selling of Rs 56 Billion.)
Q3 (Dec '16) GDP growth was 7% - lower than 7.4% in Q2 (Sep '16), but much higher than the 6.4% figure that economists had predicted due to the after-effects of demonetisation.
The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 50.7 in Feb '17 from 50.4 in Jan '17. The strong GDP and PMI numbers may put the brakes on any further interest rate cuts by RBI.
The daily bar chart pattern of Nifty rose 0.75% today after two days of correction, and closed at a new lifetime high of 8946. Bulls were active after hearing good news on the GDP and Manufacturing PMI data fronts.
All three EMAs are rising, and the index is trading above them in a bull market. For the past two months, every dip in the index has been used to buy - keeping bears on the back foot.
Daily technical indicators have corrected overbought conditions but remain in bullish zones - leaving the door open for higher levels on the index.
Nifty's TTM P/E has remained above 23 for the past month, which is much higher than the long-term average. The breadth indicator NSE TRIN (not shown) is inside its overbought zone - but some more upside can't be ruled out entirely.
Near a previous top, the outlook should be cautiously optimistic. The time to buy by the truckload passed two months back. Be very selective in your current buying.
Gold chart pattern
Shortly after the previous post, the daily bar chart pattern of Gold crossed and closed above its 200 day EMA, but immediately faced selling pressure and corrected down to test support from its rising 20 day EMA.
The next leg of the bull rally has propelled gold's price past the 1250 level. The possibility was mentioned in the previous post.
All three daily technical indicators are looking overbought, and showing negative divergences by failing to touch new highs with gold's price. That can trigger some correction or consolidation.
The 'golden cross' of the 50 day EMA above the 200 day EMA which technically confirms a bull market, is still awaited.
On longer term weekly chart (not shown), gold’s price has closed just above its 200 week EMA in long-term bull territory after four months. Weekly technical indicators have turned bullish, but Slow stochastic is overbought and can trigger a correction.
Silver chart pattern
The daily bar chart pattern of Silver has rallied splendidly during the month of Feb '17 - soaring past its 200 day EMA to reach the 18.50 level after more than three months.
The 50 day EMA has just about managed to cross above the 200 day EMA - the 'golden cross' technically confirming a return to a bull market.
All three daily technical indicators are inside their overbought zones. Expect some resistance from the zone between 18.75 and 19 - and some correction or consolidation.
On longer term weekly chart (not shown), silver’s price has closed well above its 20 week and 50 week EMAs but just below its 200 week EMA in a long-term bear market. Weekly technical indicators are looking bullish. Slow stochastic is overbought and can trigger a correction.
S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 quickly jumped above the 2360 hurdle on Tue. Feb 21, but failed to make further progress during the rest of a holiday-shortened week.
All three EMAs are rising, and the index is trading above them in a bull market.
Daily technical indicators are well inside their overbought zones. Though an index can remain overbought for long periods, technically a correction is overdue.
The index seems to be rising on the back of a strong US Dollar and hopes of an economic stimulus by the Trump administration.
On longer term weekly chart (not shown), the index closed at a new lifetime high of 2367, and is trading well above its three rising weekly EMAs in a long-term bull market. All three weekly technical indicators are inside their overbought zones - hinting at a correction.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 touched 7329.56 - a new high for the month - on Mon. Feb 20, but failed to sustain above the 7300 level.
On Fri. Feb 24, the index corrected sharply below its 20 day EMA and the 7200 level before bouncing up to close at its 20 day EMA - losing about 0.8% on a weekly closing basis.
An overbought Slow stochastic may have triggered the brief correction (refer last week's post).
Daily technical indicators are in bullish zones but showing downward momentum. Some more correction or consolidation is possible.
The index appears to be consolidating within a large 'symmetrical triangle' since touching a lifetime high of 7354 on Jan 16 '17. A breakout from the triangle can occur in either direction.
On longer term weekly chart (not shown), the index has closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones but looking a bit overbought.
In a holiday-shortened trading week, FIIs were net sellers of equity worth Rs 17.4 Billion, as per provisional figures. DIIs were net buyers of equity worth Rs 28.4 Billion - thanks to continuous inflows into domestic mutual funds.
As mentioned in the concluding comment of last week's post, both indices touched new highs. Nifty touched a new 52 week high and Sensex touched a 5 months high (falling just short of its Sep 8 '16 top).
According to D&B's latest economic forecast, India's IIP will remain muted between 0-0.5% in Jan '17. FDI in 2016 grew by 18% to US $46 Billion from $39.3 Billion in 2015.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex closed higher on all four trading days of the week - touching an intra-day high of 29065 on Thu. Feb 23 and testing its previous top of 29077 (touched on Sep 8 '16).
However, the index closed near its lowest level for the day, forming a 'shooting star' candlestick pattern. That can trigger a correction or consolidation. Any dip towards the blue up trend line will provide an adding opportunity.
Daily technical indicators are looking overbought. All four are showing negative divergences by failing to touch new highs with the index. Some correction or consolidation will improve the technical 'health' of the chart, and enable Sensex to touch a new lifetime high.
Bulls are clearly in control. That doesn't mean you should throw caution to the wind. Be very selective in your picks if you do decide to add during the next likely dip.
Some selling can be expected near a previous index top. If you are sitting on good profits - particularly in small-cap or mid-cap stocks, which are still rising and looking strong on the charts - now may be a good time to take some of the profits off the table.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty not only touched a new 52 week intra-week high but closed at a lifetime high level of 8939.50. The index is trading well above its two rising weekly EMAs in a bull market.
Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index.
An index can remain overbought for long periods during bull rallies. However, sliding volumes during last week's rally and negative divergences on technical indicators may be hinting at a pullback towards 8750.
Nifty's TTM P/E remains well above its long-term average at 23.36. The breadth indicator NSE TRIN (not shown) has resumed its fall inside its overbought zone.
Upside risk appears to be increasing by the day. Despite a not-so-strong economy, domestic liquidity flows are sustaining the market in the near term.
Bottomline? Bulls are clearly in control of Sensex and Nifty charts. The best time to book partial profits is when experts are only recommending 'buy' calls and everyone is feeling happy counting their 'paper profits'.
FIIs were net sellers of equity worth Rs 21.3 Billion during the first three days of trading this week. DIIs were net buyers of equity worth Rs 32.8 Billion, as per provisional figures.
Nifty moved above 8950 today and tested its Sep '16 top of 8969, but faced profit booking and closed below 8950. In the process, it formed a 'doji' candlestick pattern indicating indecision among market participants.
After Cognizant, TCS announced a share buyback scheme (at a premium to CMP) - putting pressure on other IT majors like Infosys, HCL Tech and Wipro to follow suit.
The daily bar chart pattern of Nifty closed higher for the fifth trading session in a row - gaining more than 200 points (about 2.3%).
All three EMAs are rising and the index is trading well above them in a bull market.
Daily technical indicators are inside their overbought zones. MACD and Slow stochastic are showing negative divergences by failing to rise higher with the index.
Nifty's TTM P/E is at 23.32 - much above its long-term average. The breadth indicator NSE TRIN (not shown) has corrected its extreme overbought condition but remains within its overbought zone.
Near term index upside appears limited. Nifty may move down to fill the 20 points upward 'gap' formed on Fri. Feb 17.
WTI Crude Oil chart
The daily bar chart pattern of WTI Crude Oil has failed to make much upward progress since touching a 52 week high on Jan 3.
Oil's price has been consolidating sideways in a range between 50.50 and 54.50 with a slight upward bias - as can be seen from the gradually rising 20 day EMA.
Daily technical indicators are in bullish zones. MACD and RSI are moving sideways. Slow stochastic is showing a bit of upward momentum.
Eventually there will be a breakout from the trading range. Expect it to be upwards - to the 59-60 zone.
On longer term weekly chart (not shown), oil's price is trading above its rising 20 week and 50 week EMAs, but below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are in bullish zones, but only Slow stochastic is showing some upward momentum.
Brent Crude Oil chart
After touching a 52 week high on Jan 3, the daily bar chart pattern of Brent Crude Oil has been stuck in a range between 53.50 and 57.50.
The gradually rising 20 day EMA indicates that bulls have retained control during the sideways consolidation.
Daily technical indicators are giving conflicting signals - which is often the case during sideways consolidations. MACD is sliding below its signal line in positive zone. RSI is moving sideways along its 50% level. Slow stochastic has dropped below its 50% level.
A likely upward breakout from the trading range can take oil's price to the 61-62 zone.
On longer term weekly chart (not shown), oil's price is trading above its rising 20 week and 50 week EMAs, but below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are in bullish zones, but not showing any upward momentum.
S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 is continuing with its gravity-defying act. After soaring past the 2300 level - where it had faced some resistance - the index has paused to catch its breath at 2350.
All three EMAs are rising, and the index is trading above them in a bull market. Bulls are using the slightest of dips to buy. However, the widening distance between the index and its 200 day EMA is a red flag.
Daily technical indicators are well inside their overbought zones. A similar occurrence two months back had triggered a 2% correction.
On longer term weekly chart (not shown), the index closed at a new lifetime high of 2351, and is trading well above its three weekly EMAs in a long-term bull market. All three weekly technical indicators are inside their overbought zones.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 shook off a strong bear attack and climbed 200 points in two weeks. It is facing some resistance at the 7300 level.
Daily technical indicators are in bullish zones, but not showing much upward momentum. Slow stochastic is inside its overbought zone, and can trigger a correction.
Expect bulls to buy any dip. The index should cross above its previous top (7354 touched on Jan 16 '17) in the near future.
On longer term weekly chart (not shown), the index has closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones but looking overbought.
